State insurance regulators have decided to stop accepting federal money for a new program that helps consumers navigate the complexities of health insurance and file complaints and appeals.

The program, started in December, was funded with a $238,000 federal grant available to the state as part of the federal health care law. The state contracted with ABC for Health, a statewide public interest law firm based in Madison, to provide the consumer assistance.

The grant was to enable ABC for Health to provide additional help to consumers, from applying to BadgerCare Plus and Medicaid, the two main state health programs, to understanding grievance and appeal options when denied services.

In a statement, the Office of the Commissioner of Insurance said it believed its office and other public and private entities were already providing the services and the program was largely duplicative and unnecessary.

"We believe that saving taxpayers, whether they are federal or state taxpayers, from unnecessary spending is in everyone's best interest," Commissioner Ted Nickel said in the statement.

But Bobby Peterson, a lawyer with ABC for Health, said the insurance commissioner does not regulate "self-funded" health plans offered by employers who pay the medical bills of employees and family members. Those plans, which are regulated by the federal government, account for about half the commercial insurance market.

He also challenged the commissioner's contention that the new program was unnecessary. ABC for Health had about 2,000 requests for assistance last year, up about 15% from 2009.

The law firm has a budget of about $650,000 a year, excluding the grant. It employs benefit counselors and other support staff and three lawyers. It also draws on law students and others as interns.

The federally funded grant enabled the law firm to add three full-time employees as benefit counselors. "It was ramping up," Peterson said.

ABC for Health is a frequent opponent of health insurers, including at times suing them on behalf of its clients. Peterson characterized the commissioner's decision as "a nice payback" for the insurance industry.

Nickel previously was director of governmental and regulatory affairs for Church Mutual Insurance Co., a property and casualty insurer in Merrill; Dan Schwartzer, the new deputy commissioner, is a former lobbyist for health insurance brokers and health insurers.

Jim Guidry, a spokesman for the agency, said that was not a consideration in the decision.